Capital Campaigns- The What? and The Why?

Capital Campaigns are designed to raise money for a specific need, almost always regarding a physical structure or asset of an organization. Most Capital Campaigns are initiated to acquire, replace, or significantly refurbish an aging facility. In some instances, donations from a Capital Campaign go towards filling those facilities with bulk – and often expensive – equipment and physical resources necessary to do the work the organization sets out to do.

Capital Campaigns are not designed to go on forever; rather, the organization needs to work backwards from the date when a new facility or equipment needs to be in place, and raise money against that date. The ideal campaign is 12-18 months in planning, 4-5 years in duration. Annual Campaigns should not be suspended during this time. The two Campaigns can and should run concurrently and actually have been shown to boost each other, when the messaging to the donor base is aligned between the two efforts. The difference is that while the Annual Campaign is refreshed and reinitiated at the beginning of each new fiscal year, the Capital Campaign should come along only once in a while, for reasons explained below.

The thing to remember about Capital Campaigns is that they are designed to raise money for one-time or seldom-recurring expenses, like facility renovations, a new church organ, or a school’s new gymnasium. Capital donations are restricted in how they can be used, and are not meant to cover anticipated operational expenses incurred in an organization’s normal course of business, nor are the funds to be directed towards a special project, such as an Awards Dinner or a search for a new CEO. Capital Campaigns are not to be confused with Endowment Campaigns, which will be addressed shortly. The primary difference is that Capital Campaigns raise money that is primarily paid out in short order to contractors or vendors that have been hired to complete the capital project. Except under certain circumstances, no money raised is invested to yield interest income in subsequent years, which is why accurately predicting and then raising exactly the amount needed to cover a capital expenditure is so important. Read on next week to learn more about Capital Campaigns.

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